In a market economy, banks fulfil a number of important functions: they collect savings and allocate them to the most efficient firms; they facilitate payments and thus reduce transaction costs; and they impose financial discipline on firms and households.
The word «credit» has different meanings; first, it is money lending, or a promise of money lending; when a Bank gives a credit limit to a customer in any form, its risk equals the amount of this limit even if the customer has not (or only) partially used this credit.
This concerns collecting deposits on current account and savings accounts. Banks have no monopoly on this activity, as for example post-offices other merchant services and Insurance companies and pension funds are also entitled to collect public savings.
Why analyse your markets? Quickly go through the following points:
1. Funding in banks Discuss briefly how are financed branches in trainees’ banks. Make sure that allocation of responsibilities between branches and head office is consistent with the business that branches are expected to do, and what they are not supposed to do.
Branch operational resources The introduction of the seminar will be done with a quick view of the main elements to take care of in financing a branch’s current activity, regardless the banking business.
This part of the handbook provides some background for Western bankers and consultants who may not always be acquainted with the specificities of banking in the CIS. Figure 1 presents our approach to the understanding of banking in transition.
EBTRA was created in order to increase the efficiency of these projects by providing a platform for the cross-fertilization and co-ordination of financial services projects in the CIS through the organization of seminars and conferences, and by developing and distributing materials that enhance training, consultancy and twinning activities.
Banks have the monopoly of the means of payment necessary to the among flow of capital between economic agents. It can be cheque-books or credit-cards or even more sophisticated systems; their production and management are very complex and costly and need an adequate technological structure.
Because of the diversity in the organisation of credit institutions and Banking professions, it’s quite difficult to propose a simple and complete definition of Bank.
